January 26, 2010 / 2:26 PM / 10 years ago

UPDATE 2-Iraqi parliament approves $72.4 bln 2010 budget

* Budget sets 27 percent deficit

* Oil exports set at 2.15 million bpd, price at $62.5/barrel

* Contemplates IMF and World Bank financing

(Adds oil price, exports)

BAGHDAD, Jan 26 (Reuters) - The Iraqi parliament on Tuesday passed a 2010 budget that sets federal spending at 84.7 trillion Iraqi dinars (around $72.4 billion) and a deficit for this year of 22.9 trillion dinars ($19.6 billion), lawmakers said.

The budget sets an expected oil price of $62.5 per barrel and puts expected average oil exports, virtually the sole source of government revenue, at 2.15 million barrels per day (bpd) in 2010, lawmakers said.

“The parliament has approved today the budget of 2010,” said Kurdish member of parliament Sami al-Atrushi, a member of the chamber’s finance committee.

The deficit amounted to 27 percent of total spending and was to be financed with surpluses from previous years and also through domestic and external borrowing, the budget law said.

Alaa al-Sadoun, head of the finance committee, said the new oil projections were an increase from the 2009 budget, which put expected oil exports at 2 million barrels per day and the oil price at $50 a barrel.

In a novel move, the parliament included in the new budget a clause setting aside $1 for each barrel of oil produced for oil-producing provinces to use in investment projects, said Ali Hussain Balou, head of parliament’s oil and gas committee.

Other provinces involved in oil refining and gas production will receive similar set-asides.

The Iraqi government is hoping that a spate of new oil deals will transform its struggling oil sector and increase production that still hovers around pre-invasion levels.

The 2010 budget law also includes authorization for Iraq to seek a $4.5 billion financing arrangement with the International Monetary Fund and contemplates $2 billion in financing by the World Bank.

The total income of the Iraqi government was estimated to reach 61.7 trillion dinars ($52.8 billion). The oil producing country relies on crude exports for more than 95 percent of government revenue.

Passage of the budget was held up for weeks by negotiations over additional spending.

Lawmakers said political dealmaking also played a role.

They said rivals of Prime Minister Nuri al-Maliki tried to demand that in return for passing the budget the government had to agree to a law that would prevent Maliki from using any state resources in the campaign for a March 7 election. (Reporting by Waleed Ibrahim; Editing by Michael Christie and Andy Bruce)

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